GLOBAL growth fears intensified yesterday after further evidence of a slowdown in the world’s two biggest economies, the US and China.

The price of oil and other commodities fell, Asian markets plunged and leading US shares came under pressure following the latest surveys showing a drop in new orders for US factory goods in April and slower growth in China’s services sector last month.

But while the UK market was closed for the bank holiday, the ­single European currency and Continental stock markets with the exception of Germany enjoyed a rebound amid signs of further action to tackle the region’s debt crisis.

It is important to consider this alternative of direct bank recapitalisation

EU economy commissioner Olli Rehn

After last Friday’s gloomy US jobs report raised the prospect of further quantitative easing stimulus measures by the Federal Reserve, the ­dollar and US stocks came under more pressure with yesterday’s downbeat Commerce Department factory goods update.

New orders for US factory goods fell in April for the third time in four months as demand slipped for everything from cars and machinery to computers.

This followed figures showing a slowdown in China’s services sector, which includes construction, in May. The non-manufacturing purchasing managers’ index fell to 55.2 from 56.1 in April. A figure above 50 indicates expansion. The country’s manufacturing sector also slowed sharply last month.

This will increase the pressure on China to take further measures to boost its economy. Its central bank has already reduced the amount of money that banks need to hold in reserve.

Brent crude slumped to a 16-month low below $96-a-barrel before rebounding above $97 while Hong Kong and Japanese stock markets lost about 2 per cent of their value. But shares in Spain and Italy, whose borrowing costs have been rising towards levels where they may be at risk of seeking a bailout, rebounded sharply as European officials pressed for direct euro-area aid for troubled banks – a move towards banking union – in the face of German opposition.

EU economy commissioner Olli Rehn and French finance minister Pierre Moscovici said Europe’s debt crisis could be eased by letting the region’s permanent rescue fund inject cash into banks instead of channelling the money through national governments.

Rehn said: “We have been considering this as a serious possibility of breaking the link between the sovereigns and the banks. It is important to consider this alternative of direct bank recapitalisation.”